NHC's Revenue Soars 22.5%, But Net Income Dips on Lower Investment Gains

TL;DR

**NHC's core business is booming, but don't get too excited about the bottom line until those investment gains stabilize.**

AI Summary

NATIONAL HEALTHCARE CORP (NHC) reported a mixed financial performance for the nine months ended September 30, 2025. Net patient revenues increased significantly to $1,095,945 thousand, up from $894,415 thousand in the prior year, representing a 22.5% increase. However, net income attributable to NHC stockholders slightly decreased to $95,166 thousand from $95,846 thousand, a 0.7% decline. This was primarily due to a substantial reduction in unrealized gains on marketable equity securities, which fell to $26,748 thousand from $56,290 thousand. Operating income showed strong growth, rising to $95,235 thousand from $60,984 thousand, a 56.2% increase, driven by higher revenues despite increased salaries, wages, and benefits of $687,840 thousand. Cash and cash equivalents significantly increased to $130,629 thousand as of September 30, 2025, from $76,121 thousand at December 31, 2024. The company also saw a notable increase in accrued payroll to $109,991 thousand from $92,719 thousand, and other current liabilities surged to $51,627 thousand from $21,377 thousand. Long-term debt was substantially reduced to $65,625 thousand from $129,500 thousand, indicating a deleveraging effort.

Why It Matters

NHC's strong operational revenue growth, particularly in net patient revenues, signals robust demand for its senior healthcare services, which is positive for investors. However, the slight dip in net income, largely due to reduced unrealized gains on marketable equity securities, highlights the volatility of investment income impacting overall profitability. This could make NHC's earnings less predictable for investors relying on consistent bottom-line growth. For employees, the increased salaries, wages, and benefits suggest continued investment in the workforce. The significant reduction in long-term debt improves the company's financial stability and could free up capital for future strategic initiatives, potentially enhancing its competitive position against rivals in the fragmented senior care market.

Risk Assessment

Risk Level: medium — While NHC demonstrated strong operational growth with net patient revenues up 22.5% to $1,095,945 thousand, the significant reliance on unrealized gains from marketable equity securities, which dropped from $56,290 thousand in 2024 to $26,748 thousand in 2025, introduces volatility. This fluctuation directly impacted net income, causing a slight decrease despite operational improvements, indicating exposure to market risk.

Analyst Insight

Investors should scrutinize NHC's core operational profitability, which is strong, but be wary of the impact of non-operating income from marketable securities. Consider NHC a long-term hold for its robust healthcare services, but factor in potential earnings volatility from its investment portfolio.

Financial Highlights

revenue

$1,131,268

operating Margin

8.4%

total Debt

$65,625

net Income

$95,166

eps

$6.10

cash Position

$130,629

revenue Growth

+20.6%

Revenue Breakdown

Key Numbers

• $1,095,945 — Net patient revenues (9 months ended Sep 30, 2025) (Increased 22.5% from $894,415 thousand in 2024)
• $95,166 — Net income attributable to NHC (9 months ended Sep 30, 2025) (Decreased 0.7% from $95,846 thousand in 2024)
• $26,748 — Unrealized gains on marketable equity securities (9 months ended Sep 30, 2025) (Decreased from $56,290 thousand in 2024)
• $95,235 — Income from operations (9 months ended Sep 30, 2025) (Increased 56.2% from $60,984 thousand in 2024)
• $130,629 — Cash and cash equivalents (Sep 30, 2025) (Increased from $76,121 thousand at Dec 31, 2024)
• $65,625 — Long-term debt (Sep 30, 2025) (Decreased from $129,500 thousand at Dec 31, 2024)
• 15,515,253 — Shares outstanding (Nov 3, 2025) (Total common shares outstanding)
• $2.50 — Diluted EPS (3 months ended Sep 30, 2025) (Decreased from $2.73 in 2024)
• $0.64 — Dividends declared per common share (3 months ended Sep 30, 2025) (Increased from $0.61 in 2024)
• 80 — Skilled nursing facilities (Number of facilities operated or managed by NHC as of Sep 30, 2025)

Key Players & Entities

• NATIONAL HEALTHCARE CORP (company) — leading provider of senior health care services
• NHC (company) — ticker symbol for National HealthCare Corporation
• Bloomberg (company) — financial news organization
• SEC (regulator) — Securities and Exchange Commission
• NYSE American (company) — stock exchange where NHC is registered
• White Oak Senior Living (company) — acquired business in 2024
• CARES Act (regulator) — legislation that established the Employee Retention Credit
• Murfreesboro, TN (person) — location of principal executive offices
• Delaware (person) — state of incorporation

FAQ

Risk Factors

• Labor Costs and Staffing [high — operational]: Salaries, wages, and benefits increased by 19.3% to $687,840 thousand for the nine months ended September 30, 2025. This significant rise, coupled with an increase in accrued payroll to $109,991 thousand, highlights the ongoing challenge of managing labor costs in the healthcare sector.
• Volatility in Investment Gains [medium — financial]: Unrealized gains on marketable equity securities decreased substantially to $26,748 thousand from $56,290 thousand. This 52.5% reduction significantly impacted net income, demonstrating the sensitivity of NHC's bottom line to market fluctuations.
• Government Reimbursement Policies [medium — regulatory]: The absence of government stimulus income in 2025, compared to $9,445 thousand in 2024, indicates a reliance on and potential vulnerability to changes in government healthcare policies and funding.
• Increased Current Liabilities [medium — financial]: Other current liabilities surged to $51,627 thousand from $21,377 thousand, a 141.5% increase. This, along with a rise in accrued payroll, warrants close monitoring of short-term financial obligations.
• Debt Reduction Strategy [low — financial]: Long-term debt was reduced by 49.4% to $65,625 thousand from $129,500 thousand. While this deleveraging improves financial flexibility, it may also reflect strategic asset sales or changes in financing.

Industry Context

The healthcare sector, particularly skilled nursing facilities, faces ongoing challenges related to labor costs, regulatory changes, and reimbursement rates. NHC operates 80 skilled nursing facilities, placing it within a competitive landscape where operational efficiency and effective cost management are crucial for profitability.

Regulatory Implications

Changes in government stimulus programs and reimbursement policies can significantly impact revenue, as seen with the absence of stimulus income in 2025. NHC must remain compliant with healthcare regulations and adapt to evolving policy landscapes.

What Investors Should Do

1. Monitor labor cost trends
2. Analyze the impact of investment volatility
3. Evaluate the sustainability of revenue growth
4. Assess the deleveraging strategy

Key Dates

• 2025-09-30: End of the third quarter and nine-month period — Reporting period for the financial results discussed in the 10-Q, showing revenue growth but a slight dip in net income due to investment performance.
• 2025-12-31: Previous fiscal year-end — Baseline for comparison of cash and cash equivalents and long-term debt.

Glossary

Net patient revenues

The total revenue generated from patient services after accounting for contractual adjustments and uncompensated care. (Primary revenue driver for NHC, showing significant growth.)

Unrealized gains on marketable equity securities

Profits from the increase in the market value of stocks or other equity investments that have not yet been sold. (A significant factor impacting NHC's net income, showing a substantial decrease.)

Income from operations

Profit generated from a company's core business activities before accounting for interest, taxes, and other non-operating items. (Demonstrates strong operational performance with a 56.2% increase.)

Accrued payroll

Wages and salaries earned by employees but not yet paid by the company as of the reporting date. (Increased significantly, reflecting higher labor costs or staffing levels.)

Noncontrolling interest

The portion of equity interest in a subsidiary that is not attributable to the parent company. (A small negative impact on net income attributable to NHC in the current period.)

Year-Over-Year Comparison

Compared to the prior year, NATIONAL HEALTHCARE CORP (NHC) has demonstrated robust revenue growth, with net patient revenues increasing by 22.5% to $1,095,945 thousand. However, net income attributable to NHC stockholders saw a slight decrease of 0.7% to $95,166 thousand, primarily due to a significant drop in unrealized gains on marketable equity securities. Operating income showed strong improvement, up 56.2%, driven by higher revenues despite increased labor costs. The company has also significantly strengthened its cash position and reduced its long-term debt by nearly half.

Key Financial Figures

• $0.01 — exchange on which registered Common, $0.01 par value NHC NYSE American Indic

Filing Documents

• nhc20250930_10q.htm (10-Q) — 1985KB
• ex_875291.htm (EX-31.1) — 14KB
• ex_875292.htm (EX-31.2) — 14KB
• ex_875293.htm (EX-32) — 10KB
• nhc01.jpg (GRAPHIC) — 7KB
• 0001437749-25-033631.txt ( ) — 9037KB
• nhc-20250930.xsd (EX-101.SCH) — 67KB
• nhc-20250930_cal.xml (EX-101.CAL) — 66KB
• nhc-20250930_def.xml (EX-101.DEF) — 449KB
• nhc-20250930_lab.xml (EX-101.LAB) — 397KB
• nhc-20250930_pre.xml (EX-101.PRE) — 495KB
• nhc20250930_10q_htm.xml (XML) — 1677KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Page Item 1.

Financial Statements

Financial Statements 4 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 40

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults Upon Senior Securities 40 Item 4. Mine Safety Disclosures 40 Item 5. Other Information 40 Item 6. Exhibits 41 3 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. NATIONAL HEALTHCARE CORPORATION Interim Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) Three Months Ended September 30 Nine Months Ended September 30 2025 2024 2025 2024 Revenues: Net patient revenues $ 370,989 $ 328,674 $ 1,095,945 $ 894,415 Other revenues 11,672 11,524 35,323 34,172 Government stimulus income - - - 9,445 Net operating revenues and grant income 382,661 340,198 1,131,268 938,032 Cost and expenses: Salaries, wages, and benefits 233,176 213,395 687,840 576,609 Other operating 96,604 82,509 281,004 238,092 Facility rent 11,345 10,886 34,038 31,804 Depreciation and amortization 11,158 10,619 33,151 30,543 Total costs and expenses 352,283 317,409 1,036,033 877,048 Income from operations 30,378 22,789 95,235 60,984 Other income (expense): Non–operating income 4,660 4,224 13,871 14,865 Interest expense ( 1,456 ) ( 1,742 ) ( 5,555 ) ( 1,788 ) Unrealized gains on marketable equity securities 20,827 32,767 26,748 56,290 Income before income taxes 54,409 58,038 130,299 130,351 Income tax provision ( 13,400 ) ( 15,338 ) ( 32,887 ) ( 34,294 ) Net income 41,009 42,700 97,412 96,057 Net (income)/loss attributable to noncontrolling interest ( 1,770 ) 89 ( 2,246 ) ( 211 ) Net income attributable to National HealthCare Corporation $ 39,239 $ 42,789 $ 95,166 $ 95,846 Earnings per share attributable to National HealthCare Corporation stockholders: Basic $ 2.53 $ 2.78 $ 6.15 $ 6.23 Diluted $ 2.50 $ 2.73 $ 6.10 $ 6.15 Weighted average common shares outstanding: Basic 15,484,464 15,411,680 15,461,804 15,384,758 Diluted 15,664,530 15,667,321 15,613,505 15,576,294 Dividends declared per common share $ 0.64 $ 0.61 $ 1.89 $ 1.81 The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements. 4 Table of Contents NATIONAL

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